Intellectual Property – Trademark Infringement – Civil Practice – Res Judicata & Collateral Estoppel

Georgia-Pacific Consumer Products LP v. Von Drehle Corp. (Lawyers Weekly No. 12-02-0458, 10 pp.) (Terrence W. Boyle, J.) 5:05-cv-478; E.D.N.C.

Holding: Plaintiff has filed a number of suits around the country alleging that defendant or its distributors infringed plaintiff’s trademark when they sold paper towels designed to fit into plaintiff’s enMotion paper towel dispensers. Plaintiff’s claim in this case is precluded by decisions in other courts that defendant’s actions did not infringe plaintiff’s trademark.

Although a jury awarded plaintiff $791,431 in damages, the court grants defendant’s post-trial motion for judgment as a matter of law.

In Georgia-Pacific Consumer Products LP v. Myers Supply, Inc., 621 F.3d 771 (8^th Cir. 2010), the court affirmed a Western District of Arkansas judgment that there is no likelihood of confusion, and therefore no trademark infringement, when plaintiff’s enMotion dispensers are stuffed with another manufacturer’s paper towels. The court in Georgia-Pacific Consumer Products LP v. Four-U Packaging, Inc., ___ F.Supp.2d ___, 2011 WL 5252626 (N.D. Ohio, Nov. 4, 2011), relied on the Eighth Circuit decision when it dismissed plaintiff’s trademark infringement claims on the basis of issue preclusion.

Because defendant promptly alerted the court to the holding by the Northern District of Ohio, and because defendant’s actions do not evince bad faith or dilatory motive, it is within the discretion of the court to allow defendant to amend its answer to include preclusion defenses. Alternatively, in light of the circumstances present in this case, which include several lawsuits filed by Plaintiff attempting to litigate the same core question, the court finds on its own motion that a preclusion defense is appropriate. Accordingly, the defense of preclusion based on the opinion of the Eighth Circuit affirming the judgment of the Western District of Arkansas and the order of the Northern District of Ohio finding such judgments preclusive is properly before the court.

The Fourth Circuit applies a three-element test to determine whether a claim is barred by the principles of res judicata: (I) whether the judgment in the prior action was final and on the merits, (2) whether the parties in the two actions are identical or in privity, and (3) whether the causes of action in the two suits are identical.

As to the first element, the judgment from the Western District of Arkansas was entered following a bench trial and was both final and on the merits. Defendant has also satisfied the second element as the plaintiffs in both actions are identical and defendant in the Arkansas litigation – defendant’s distributor — and defendant in this action are in privity. With regard to the third element, plaintiff’s claims against defendant as well as plaintiff’s claims against defendant’s distributor in the Arkansas (and Northern District of Ohio) case arise from the same core of operative facts. Plaintiff’s claims for trademark infringement and unfair competition in each of these cases rests on the “stuffing” of another manufacturer’s paper towels into its enMotion paper towel dispenser and whether a likelihood of confusion results from such an act.

Prior to the jury verdict and entry of judgment in this case, the Western District of Arkansas court found, as a matter of fact following bench trial, that the stuffing of enMotion dispensers with 81 O-B paper towels did not create a likelihood of confusion and that no trademark infringement had therefore occurred. Accordingly, the court finds that plaintiff’s claim for trademark infringement is subject to an affirmative defense of res judicata.

Defendant has also satisfied the elements of collateral estoppel. The issue defendant seeks to be precluded, whether “stuffing” of other manufacturer’s paper towels in plaintiff’s enMotion dispensers constitutes trademark infringement, is identical to the issue previously litigated in Arkansas. The issue of trademark infringement was actually determined by the Arkansas court following a bench trial, and it was a critical and necessary part of the prior proceeding; indeed, plaintiff’s trademark infringement claim arguably provides the primary basis for each of these separate actions. The Arkansas judgment is final and valid, and plaintiff had a full and fair opportunity to litigate the issue of trademark infringement in a bench trial on the merits.

Defendant’s motion for judgment as a matter of law is granted.